Estate planning for the many facets of the modern family


The very definition of a family structure takes on more than one form today. How does a unique family setup affect the process of estate planning?

The many layers of a family structure

Family structures now include divorced couples, remarriage, blended family households, domestic partnerships between couples who have chosen not to marry, same sex couples, single parents and many more. Estranged family members are also common. The level of complexity to any family dynamic can increase or change at any point. Not only are family structures more complex, but so too are relationships.

Surveys looking into the home structures of how children are being brought up is reflective of changing societies. As at the end of 2018, as many as 43% of children were being raised in a single parent household in South Africa, usually by the mother. Only around 3% lived with their fathers. Less than a third of children appear to live with both their biological parents. It is also estimated that around 4 in 10 marriages end up in divorce in the country. The bottom line is that the home takes on many forms and is layered with unique scenarios. No two households are alike.

Estate planning has, despite its rigidly structured processes and being almost entirely dependent on legislation to regulate it, adapted its handling processes to serve the changing family dynamics of society better. Each case intrinsically different in structure and with independent needs.

"Diverse family relationships has a direct effect on the ways in which estate planning is addressed and managed," shares Onalenna Disipi, a Discovery-certified financial adviser.

"Complex situations are not just reserved for the rich and famous anymore," she adds. "A dynamic family structure with a relatively simple or humble estate can sometimes be complex. The intricacies of the modern family dynamic means that relationships alone require careful thought throughout the process. How conversations are or aren't handled form an important part of the process. The modern family now requires less of a one-size-fits-all approach to structuring an estate plan. It needs to be as unique as the family is."

Establishing harmony

Structuring an estate plan will need to establish the relationship status of a family dynamic upfront. "You could be faced with any number of scenarios," says Disipi.

"In any scenario, young or older children can feature in the mix - even adult children," adds Disipi. "Decision-making needs to factor in so many layers and angles too."

Handling an estate plan almost demands that individuals approach it with an open attitude, foresight and respect for all involved. A clear head is essential. Whatever decisions you make will likely have a direct effect on the interrelationships of other family members. Carefully considering people as individuals in the context of your planning may be a very useful approach and help to minimise any misunderstanding or divisive consequences.

One of the most challenging aspects has to do with a will. There are many who unfortunately regard it as a document that reflects the testator's true opinion of them. If there are existing sensitivities of this nature, it can take on a whole new layer of challenge in the planning process.

"Then there are perspectives around the true value of things. Some things or assets are valuable because they are sentimental. Perspectives around this can differ. Those who inherit sometimes try and quantify all types of things by attaching a price tag," she adds. "Definitions of what is fair is another challenge to consider."

However, how individuals choose to distribute their assets is entirely their choice. So, how can disagreement between families be avoided? "Conversations can really go a long way," says Disipi. "Yes, estate planning a serious enough business that it must be done very carefully, but it needn't be something that must be done independently and behind closed doors. In many instances, involving family members during the planning stages where appropriate can be a valuable differentiator and bring about a more harmonious outcome."

Talking through it

A significant part of estate planning is structuring assets according to wishes in a way that streamlines the transition from one generation to another. The process is as much about money and possessions as it is about leaving behind a legacy.

Disipi would encourage a holistic approach for families. She says that societal mindsets have changed. More people are educated and well-adjusted to the various social dynamics that exist in today's world. Estate planning can to some extent involve more members of a family than just the client.

Conversations during planning stages can be helpful for strengthening relationships in families. An inclusive rather than secretive approach can really benefit many families. Open conversation can help to build confidence in one another. By sharing perspectives, families can have a better understanding of one another too. Sharing also allows more options to be explored, addressing needs or concerns in a way that considers everyone whose futures will be affected in some way by a plan.

Conversation can be a meaningful process that begins with each individual's set of values, as well as those of the family as a whole. "It's approaching estate planning in a more collaborative way," adds Disipi. "The traditional structure of legal processes can support this approach, helping to maximise the benefits a family ultimately wants to achieve."

Conversations must however, factor in the age of various family members. Young children and teenagers likely have limited ability to understand things and aren't mentally or emotionally ready to contemplate not having their family around. So, conversation isn't necessarily appropriate in this instance. Older and adult children can comprehend the responsibility and therefore open communication is more appropriate in such cases.

This is an opportunity for the client to really learn about their family's views, wants or needs. There may be perspectives that weren't considered before that come to light through conversation and many families may find that they can achieve positive outcomes together. It also eliminates opportunity for misunderstanding or even resentment that could drive a wedge within families.

How to talk to a family about an estate plan

Discussions around money can be tricky territory for many, especially for parents who've never really shared details of their personal finances or assets with their children before. People also feel differently towards money. Having conversations opens the door for all involved to acknowledge death - a subject that unsettles most people.

"It's understandable that death and one's own mortality - or that of someone close to you - is a subject many are fearful of," says Disipi. "It prompts all kinds of emotions that are challenging and many of us would prefer not to be thrown into having to acknowledge or accept the emotions that come with a discussion around this without feeling ready to be."

Removing fear from the equation is best to do before initiating conversations. Fear will be a difficult elephant in the room to get past otherwise, and could steer a discussion in less than fruitful ways. Ultimately, you want to achieve a level of understanding that, when the time comes, you won't leave loved ones having to try and cope with estate matters when they are likely to be at their most emotionally vulnerable.

Help families not to be fearful of the kinds of questions that will come up during such discussions. There will be many and not all will have straightforward or simple answers. It will touch on complex issues, which won't be any easier if postponed for another time. This is about a significant event in a family and it requires all to participate transition to achieve the desired outcome.

Families must understand that how a discussion is approached is personal. No two families are alike. Discussion points and questions will typically fit with an individual family's set of circumstances. When this is open, honest and committed to with respect, the right kind of answers tend to be received and understood.

Preparing for the estate planning meeting

Preparation ahead of a discussion is still a crucial factor if it is to be a successful one. Many families may not even anticipate some sensitivities that could crop up until such discussions take place - even the most seemingly harmonious of families can fracture when this process uncovers latent thoughts or feelings never spoken of before.

Families can involve a mediator - a neutral third party - who can initiate confidential discussions with family members independently ahead of a family get-together. This helps family members to prepare themselves, as well as understand the process of how it will best work.

A mediator can get a clearer sense of potential hidden agendas or possible issues that may arise during discussion, which could ultimately steer conversation away from the intended purpose. For a mediator, this is about gaining a solid understanding of the family dynamics as they are and being able to spot any contentious issues. Their role is to fully understand the dynamics and culture of a family in relation to the goals an estate plan will need to achieve. A mediator should not have existing relationships with the family. They are merely there to perform a professional duty and remain unemotionally involved.

An estate planning attorney, legal or financial adviser can also participate in the discussion process. Such participants know and understand the broader significance of getting the process done correctly. Being part of these discussions enables them to understand how a structured plan may result in family disharmony and instead find a better way to divide things and not the family at such a sensitive time in their lives. It's an opportunity to take the needs of individual family members and their relationships as a whole into careful consideration.

Having professionals involved in discussions has the advantage of being able to help create and encourage a safe environment for sensitive points to be raised; they are there to guide the process in a constructive way. All should function neutrally in the discussion, the role is to moderate the flow of conversation, ensuring that resolutions and consensual agreement are reached by the end of it.

Other advantages of having a mediator present includes:

  • Enabling individuals an opportunity to explain the rationale behind why they intend to distribute their wealth or assets a certain way
  • Enabling families an opportunity to resolve underlying interpersonal problems
  • Reinforce the values of a family, collectively and as individuals
  • Limit unwanted surprises and conflict

Estate planning is not just about minimising taxes, it is also about family. The process of passing along assets from one generation to another need the legal system to enable a smooth transition, but the wish to do so is personal.

Approaching the complexities of a dynamic household, no matter what its structure, with clear goals helps the process along. If the aspects that make a family unique can be addressed in ways that are most relevant to their circumstances, the right solution can be agreed upon. Legacies are only built on the right kind of understanding and a collaborative process can help to achieve that.

Start building a strong relationship with your client's today.

Discovery Wills and Trust Services, a division of Discovery Central Services (Pty) Limited, a company registered in South Africa with registration number 2016/054628/07 and part of the Discovery group of companies. Discovery Life Limited. Registration number 1966/003901/06, is a licensed insurer, and an authorised financial services and registered credit provider, NCR Reg No. NCRCP3555

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